LANDLORDS who took out a mortgage for buy-to-let properties just under 20 years ago have seen their investment outperform cash, bonds and shares.
The new study highlights not only the rise in property prices it also shows the effect of borrowing.
LANDLORDS who took out a mortgage for buy-to-let properties just under 20 years ago have seen their investment outperform cash, bonds and shares.
The new study highlights not only the rise in property prices it also shows the effect of borrowing. If investors put down a deposit of 25 per cent and borrowed the rest via specialist mortgages, which first became available in 1996, then every £1 is now worth £14.90.
This investment has produced net annual returns of 16.2 per cent over the past 18 years, compared with 6.5 per cent if the same amount was put in to the stock market.
Carl Davis, a partner at Nigel Davis Property Services, the Wellingborough-based independent letting specialists, said: “This data highlights what many people in the property industry have recognised for a long time that investment in buy-to-let properties is a good option. Investment in property can be a longer-term commitment but it is clear there are real opportunities for those who take the decision without the risks in stocks and shares or relying on low interest rates.
“This survey shows that once again landlords should feel confident about their investment and recognise why it is important to take specialist advice to ensure they make the most of the opportunities.”
The same survey revealed that cash buyers who poured money into buy-to-let 18 years ago have now turned £1 into £5.07 – a net annual return of 9.4 per cent. Economist Rob Thomas, who undertook the survey on behalf of lender Landbay, found that in the same time frame, commercial investments turned £1 into £4.49.
Cash savings were the worst performers, according to the report, where £1 is now worth just under £2. The method of low cost leveraging, coupled with rising prices for most of the two decades, helped amateur landlords who were able to build equity against which to borrow again and make further profits.
Carl said: “There is currently exceptionally high demand for property of all types from tenants. We are able to assist landlords throughout the whole process from sourcing a property to purchase, right through to managing the property on an ongoing basis.”
For information about the services provided by Nigel Davis Property Services call 01933 272292, email or visit the website at www.nigeldavislettings.co.uk